POLYMETALLIC PRODUCER with exciting GROWTH POTENTIAL

Transcription

1 CORPORATE PRESENTATION June 2018 POLYMETALLIC PRODUCER with exciting GROWTH POTENTIAL TSX: SMT NYSE AMERICAN: SMTS BVL: SMT

2 Disclaimer Certain statements in this presentation constitute forward-looking information within the meaning of Canadian and United States securities legislation. Forward-looking information relates to future events or the anticipated performance of Sierra and reflect management's expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action. In certain cases, statements that contain forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur" or "be achieved" or the negative of these words or comparable terminology. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra to be materially different from any anticipated performance expressed or implied by such forward-looking information. These include estimates of future production levels; expectations regarding mine production costs; expected trends in mineral prices; changes in general economic conditions and financial markets; changes in prices for silver and other metals; technological and operational hazards in Sierra's mining and mine development activities; risks inherent in mineral exploration; uncertainties inherent in the estimation of mineral reserves, mineral resources, and metal recoveries; the timing and availability of financing; governmental and other approvals; political unrest or instability in countries where Sierra is active; labor relations and other risk factors disclosed in Sierra's Annual Information Form, which is available on SEDAR at and which is incorporated by reference into the prospectus forming part of the Company s registration statement on Form F-10, filed with the SEC and available at Although Sierra has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking information, there may be other factors that cause its performance not to be as anticipated. Sierra neither intends nor assumes any obligation to update these statements containing forward-looking information to reflect changes in assumptions or circumstances other than as required by applicable law. There can be no assurance that forward-looking information will prove to be accurate as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not place undue reliance on forward-looking information. This presentation uses the terms "measured resources", "indicated resources" and "inferred resources" as such terms are recognized under National Instrument Standards of Disclosure for Mineral Projects ("NI ") adopted by the Canadian Securities Administrators. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a "preliminary assessment" as defined under NI Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. Gordon Babcock B.Sc., P.Eng., is the qualified person as defined in NI and Chief Operating Officer for Sierra Metals supervised the preparation of the operational scientific and technical information for Sierra Metals included in this presentation. Americo Zuzunaga, MAusIMM CP (Mining Engineer) and Vice President of Corporate Planning is a Qualified Person and chartered professional qualifying as a Competent Person under the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Augusto Chung, FAusIMM CP (Metallurgist) and Consultant to Sierra Metals is a Qualified Person and chartered professional qualifying as a Competent Person on metallurgical processes. Cautionary Note to U.S. Investors: While the terms measured resources, indicated resources, and inferred resources are defined in and required to be disclosed by NI these terms are not defined under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves. Accordingly, information concerning mineral deposits contained in or referred to in this presentation may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder. Use of Non-IFRS Financial Measures: This presentation contains Non-IFRS financial measures including all in-sustaining costs, EBITDA, Free Cash Flow and Net Debt. Sierra uses these Non-IFRS performance measures and ratios in managing its business. Sierra believes that these measures assist investors in understanding the company s performance. Non- IFRS financial measures should be viewed in addition to, and not as an alternative for, the reported operating results or cash flow from operations or any other measures prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly situated titled measures that other companies use. Please see Reconciliation of IFRS to Non-IFRS Financial Measures in the Appendix to this presentation for a reconciliation to the most comparable IFRS financial measure. Additional Information: Sierra Metals Inc. has filed a base prospectus and a prospectus supplement with the CSC and a registration statement (including a prospectus and prospectus supplement) with the SEC for an at the market offering of its Common Shares ( ATM offering ). Investors considering a purchase of shares in the ATM offering should read the prospectus, prospectus supplement and documents incorporated into the registration statement and other documents that Sierra Metals has filed with the SEC and CSC for more information concerning the ATM offering and the issuer. These documents are available without charge from the SEC s EDGAR database at and on SEDAR at

3 INVESTMENT HIGHLIGHTS A Base and Precious Metal Growth Story 3MINES 2 COUNTRIES 1SOLID INVESTMENT OPPORTUNITY Yauricocha Mine, Peru Bolivar Mine, Mexico Cusi Mine, Mexico

4 INVESTMENT HIGHLIGHTS A Base and Precious Metal Growth Story BROWNFIELD EXPLORATION Near-Mine Exploration Progress and Further Potential PRODUCTION GROWTH SOLID FINANCIAL POSITION CONSISTENT FREE CASH FLOW STRONG GROWTH PRODUCTION OPTIMIZATION Successfully Implementing Modern Mining Practices Cash Position 1 US$25.5M Debt Position 1 US$66.8M 3M-2018 CF Before Movements in WC 2,4 US$27.3M Net Debt Position 1,3 US$41.3M 1. All figures as reported in Sierra s Financial statements and Management Discussion & Analysis (MD&A) for the three-month period ending March 31, 2018 as filed on SEDAR. 2. Non-IFRS number; please see Appendix for reconciliation to IFRS measures. 3. Net debt, a non-ifrs measure equals consolidated debt minus cash and cash equivalents. 4. Cash Flow from Operations before movements in working capital excludes the movement from period to period in working capital items including trade and other receivables, prepaid expenses, cash taxes paid, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. 4

5 CAPITAL Structure Outstanding 1 RSUs 1 Options 1 Fully Diluted M 1.4 M Nil M Major Shareholders Arias Resource Capital 52% BlackRock 10% Ingalls & Snyder 5% Omega Advisors 3% TSX ($CAD) NYSE Am. ($US) Recent Price 1 $3.57 $2.65 Actions to address liquidity include: NYSE American listing Major shareholder willing to dilute below 50% 52 Week High 1 $3.85 $ Week Low 1 $2.75 $2.13 Market Cap $583.4 M $433.1 M 1. As at June 27,

6 BROWNFIELD EXPLORATION PLAN Aggressively Drilling to Increase Resources Targeting increases in resources and reserves through on-going aggressive exploration programs at all three properties Update of Technical Reports for all three Mines Yauricocha and Cusi already completed, Bolivar Resource and Reserve update released on May 22, 2018, with a NI to be filed within 45 days Drilling (meters) 350, ,000* 300, ,000 Mexico (170,000) 200, , ,000 Completed 83,000 71,250* Peru (160,000) 50,000 Cusi (48,000) Cusi (27,750) Bolivar (10,000) Bolivar (17,000) Yauricocha (33,500) Yauricocha (18,000) 0 Completed Shorter Term Longer Term (4 year period) (2017) (2018) (Nov 18 to Oct 22) * Planned drilling in meters subject to uncertainty, may or may not be completed. 6

7 STRATEGIC GROWTH Building Resources and Infrastructure for Increased Production BROWNFIELD EXPLORATION INFRASTRUCTURE UPDATES FEASIBILITY & ENGINEERING STUDIES CONSTRUCTION & OPERATION Focus on Organic Growth Exploration of Target Rich Properties Short, and Longer Term Drilling Programs Targeting Increases in Resources and Reserves Yauricocha NI Technical Report completed Cusi NI Technical Report completed Bolivar Resource and Reserve update released on May 22, 2018, with a NI to be filed within 45 days Upgrading of infrastructure and equipment 1 Optimum plant size definition Best technology to process new resources Permitting Cusi PEA released on June 18, 2018, technical report to be filed within 45 days Yauricocha PEA released on June 27, 2018, technical report to be filed within 45 days PEA s expected for Bolivar in the near-term 2 Detailed engineering Construction of expanded facilities (mine and plant) Mine infrastructure upgrades to meet new capacities 3 7

8 DIVERSIFIED 3 Projects in 2 Countries Revenue Mix (Trailing 12 months ending March 31, 2018) 13% 2% SILVER GOLD 40% ZINC 32% COPPER 13% LEAD YAURICOCHA BOLIVAR CUSI LOCATION YAUYOS, PERU CHIHUAHUA, MEXICO CHIHUAHUA, MEXICO OWNERSHIP 82% 100% 100% STAGE PRODUCTION PRODUCTION PRODUCTION / DEVELOPMENT MINE TYPE UG UG UG MILL THROUGHPUT (TPD) 1 3,000 3,000 growing to 3, growing to 1,200 in Q to 2,700 in 2021 METALS Zn, Cu, Pb, Ag, Au Cu, Ag, Au Ag, Pb, Zn, Au CF BEFORE MOVEMENTS IN WC (3M-2018) 2 $24.1M 3 $4.7M $(0.6M) 1. TPD is measured using the metric system. 2. Cash Flow from Operations before movements in working capital is a non-ifrs number and excludes the movement from period to period in working capital items including trade and other receivables, prepaid expenses, cash taxes paid, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. Please see Appendix for reconciliation to comparable IFRS measure. 3. Assumes 100% ownership of Yauricocha. 8

9 SOLID Financial Position Figures in US ($000 s) M-2018 Outstanding Shares 161,939, ,356, ,812, ,427,335 Revenue 134, , ,118 61,675 Net Income (Loss) (33,302) (12,721) (860) 11,133 CF Before Movements in WC 1 32,475 44,303 79,785 27,348 Capex (37,601) (25,352) (51,607) (9,737) Free Cash Flow 2,4 (5,126) 18,951 28,178 17,611 Cash and Cash Equivalents 25,102 42,145 23,878 25,514 Debt Outstanding 76,086 78,681 64,860 66,825 Net Debt 3 50,984 36,537 40,982 41,311 Cash Flow Before Movements in Working Capital $79.8 Net Debt / CF Before Movements in WC 1.6x $32.5 $44.3 $ x 0.5x 0.4x M E * *2018 Estimate assumes annualized rate for CF Before Movements in WC at 3M-2018 All figures as reported in Sierra s MD&A for the relevant period. 1. Cash Flow from Operations before movements in working capital excludes the movement from period to period in working capital items including trade and other receivables, prepaid expenses, cash taxes paid, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. 2. Free Cash Flow represents Cash Flow from Operations before movements in working capital less capex. See Appendix for reconciliation. 3. Net Debt represents Consolidated debt minus total cash and cash equivalents. 4. Non-IFRS number. 9

10 PRODUCTION Production & Costs vs Guidance 3M-2018 Production 2018 Production Guidance (000 s) 3M-2018 Low High Zinc Eq. (M lbs) Zinc Eq. (M lbs) Copper Eq. (M lbs) Copper Eq. (M lbs) Silver Eq. (M ozs) Silver Eq. (M ozs) M-2018 Costs 2018 Cost Guidance Cash Costs per Equivalent Oz / Lb Sold AISC per Equivalent Oz / Lb Sold 2 Cash Costs per Equivalent Oz / Lb Sold AISC per Equivalent Oz / Lb Sold 2 Yauricocha (Zn Eq Lb) $0.57/lb $0.82/lb Yauricocha (Zn Eq Lb) $0.62/lb $0.78/lb Bolivar (Cu Eq Lb) $1.29/lb $1.94/lb Bolivar (Cu Eq Lb) $1.60/lb $1.96/lb Cusi (Ag Eq Oz) $18.34/oz $28.33/oz Cusi (Ag Eq Oz) $11.12/oz $14.28/oz 1. Silver equivalent ounces, copper and zinc equivalent pounds were calculated using quarterly realized metal prices. Silver, copper and zinc equivalent guidance figures will change based on metal prices used each quarter in the equivalent metal calculations. See Appendix for quarterly realized metal prices for the last 13 quarters. 2. All-In-Sustaining-Costs (AISC) include treatment and refining charges, selling costs, g&a and sustaining capex. AISC is a non-ifrs number. Please see Appendix for a reconciliation of non-ifrs numbers to comparable IFRS numbers. 10

11 YAURICOCHA MINE Escondida Cuye/Mascota Esperanza In Continuous Operation Since 1948 (70 Years) and still Growing

12 PERU Yauricocha Polymetallic Mine Ownership 82% Size Commodities Operation Mill throughput Annual Production Concentrates 18,000 Hectares Silver, lead, zinc, copper, gold Underground mine: sub-level caving & cut and fill 3,000 TPD 147 M lbs Zinc Equivalent Polymetallic Circuit Lead, Copper and Zinc concentrate Lead Oxide Circuit Lead Oxide concentrate Copper Oxide Circuit Copper Oxide concentrate Proven & Probable Measured & Indicated Tonnes M Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Zn Eq (%) Zn Eq (M lb) , ,028 Inferred *Includes P&P Details of the reserve & resource estimates for Yauricocha are presented in the Appendix. Reserve Life* 8.7 years Deposit Type High-temperature, carbonate-replacement deposit *Reserve Life calculated as Proven & Probable Reserves divided by Annual Mill throughput. TAILINGS 12

13 PERU Yauricocha Production & Costs Production M-2018 Revenue Mix Trailing 12 months ending March 31, 2018 Tonnes processed 1 832, ,169 1,023, ,389 Tonnes per day 2,378 2,563 2,924 3,102 Zinc Eq (M Lbs) Financial Summary M-2018 Revenue ($000 s) $80,113 $97,290 $154,153 $46,563 Net Income (Loss) $(13,910) $(5,250) $17,958 $12,590 53% ZINC 11% SILVER 19% COPPER 16% LEAD 1% GOLD CF Before Movements in WC ($000 s) 3 $24,146 $34,902 $74,815 $24,138 Cash Cost per tonne processed $52.65 $55.78 $62.42 $63.04 Zinc Equivalent Production (M lbs). Cash Cost per Zn Eq pound sold $0.38 $0.42 $0.50 $0.57 All-in Sustaining Cost per Zn Eq pound sold 4 $0.70 $0.71 $0.78 $0.82 All figures as reported in Sierra s MD&A for the relevant period. 1. Metric tonnes 2. Zinc equivalent pounds were calculated using quarterly realized metal prices. Zinc equivalent figures will change based on metal prices used each quarter in the equivalent metal calculations. See Appendix for quarterly realized metal prices for the last 13 quarters. 3. Cash Flow from Operations before movements in working capital is a non-ifrs number and excludes the movement from period to period in working capital items including trade and other receivables, prepaid expenses, cash taxes paid, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. Please see Appendix for reconciliation to comparable IFRS measure. 4. All-in Sustaining Costs is a non-ifrs number and includes Treatment and Refining Charges, Selling Costs, G&A Costs and Sustaining Capex. Please see Appendix for reconciliation to comparable IFRS measure. Zn Eq M Lbs M

14 PERU Yauricocha PEA for 66% Output Expansion Plant Processing Rate 5,500 TPD NPV: $393 Million (After tax with 8% discount) ROI: 486% TPD 3,600 TPD Current Q Other Highlights of the PEA include: After-tax Payback Period Life of Mine Capital: 4.1 years Life of Mine Capital Cost: US$238 Million Net After-tax Cash Flow: US$532 Million Total Operating Unit Cost: $43.86/tonne Mine Processing Rate: 5,500 tonnes per day (TPD) Plant Processing Rate: 5,500 TPD Life of Mine: 10 years based on existing Mineral Resource Estimate Life of Mine Zinc Payable Production Million Pounds 14

15 EXPLORATION PROGRESS New Zones Discovered with Continued Exploration at Yauricocha Escondida Zone Esperanza North Zone Esperanza Ore Body Contacto Oriental Contacto Sur Medio 15

16 EXPLORATION PROGRESS Yauricocha: 3D Image of Ore Deposits Nv. 720 Nv. 720 Pique Mascota Pique Central Cachi Cachi mine Central Mine Nv. 720 Nv. 770 Nv. 820 Nv. 870 (Level more deep) Proyect XC. 5000, Integration Central and Cachi Cachi mine - Nv Nv. 720 Nv. 770 Nv. 820 Nv. 870 Nv. 920 Nv. 970 Nv Nv Levell more deep 16

17 TECHNICAL REPORT 2016 Growing Mineral Reserves & Resources through Brownfield Exploration As a result of continued exploration, wider zones with significantly higher metal grades have been discovered, which may provide the potential for greater amounts of metals produced. Cuerpos Chicos/Cuerpos Pequenos Average width: 1-5 Meters These areas continue to be defined as part of the definition drilling program Esperanza Area Average width: Meters Central Mine Area Average width: 6-8 Meters 17

18 TECHNICAL REPORT 2017 Reserves Estimate increased by 134% and Mine Life Doubled Cachi Cachi Esperanza Mascota/Cuye Central Mine 18

19 EXPLORATION PROGRESS Yauricocha: Titan 24 Survey Coverage Titan 24 technology can penetrate to depths of up to 1,200 meters below surface Measures resistivity, conductivity, then is cross referenced with lithology and regional geology Esperanza- Cachi-Cachi Mina Central San Juan.. Doña Leona Yauricocha South / Fortuna Chonta Fault Yanaorco Yauricocha Fault Kilkasca 19

20 YAURICOCHA MINE Potential Growth Areas of the Yauricocha Mine O p e n O p e n Location of recent Cuye drilling O p e n 20

21 YAURICOCHA MINE Regional Growth Potential Targets Land Package: 180 km 2 (18,000 Hectares) Very large land package containing over 18,000 Hectares. 82% owned by Sierra. Central Mine Area Chonta Trend La Fortuna Yauricocha Fault Kilkasca Current brownfield exploration and drilling focused on the Central Mine Area which is only a small portion of the total land package. La Fortuna has significant outcrops of copper. Further drilling may determine if there is potential for higher grade copper source. Kilkasca was a former producing mine, halting production while still in ore, with mine life remaining. This may represent a promising target for future organic growth and expansion. Ipillo 2,500m 21

22 BOLIVAR MINE Reinterpretation of Geology - Metal Production Increases

23 MEXICO-BOLIVAR MINE Bolivar Copper Mine Ownership 100% Tonnes M Ag (g/t) Cu (%) Au (g/t) Cu Eq (%) Cu Eq (M lb) Size Commodities Operation Mill throughput Annual Production Concentrates Reserve Life* Deposit Type 15,217 Hectares Copper, silver, gold Underground mine: room and pillar 3,000 TPD increasing to 3,500 TPD 18.3 M Lbs Copper Equivalent Copper with silver and gold byproduct credits 7 years Copper skarn Probable Indicated* Inferred *Includes Probable Details of the reserve & resource estimates for Bolivar are presented in the Appendix. *Reserve Life calculated as Proven & Probable Reserves divided by Annual Mill throughput 23

24 MEXICO-BOLIVAR MINE Production & Costs Production M-2018 Tonnes processed 1 830, , , ,375 Tonnes per day 2,373 2,715 2,535 2,964 Copper Eq (M lbs) Revenue Mix Trailing 12 months ending March 31, % 8% GOLD SILVER Financial Summary M-2018 Revenue ($000 s) $41,778 $33,267 $44,949 $13,856 80% COPPER Net Income (Loss) $(3,286) $(6,853) $(3,230) $1,226 CF Before Movements in WC ($000 s) 3 $4,058 $5,120 $10,651 $4,799 Cash Cost per tonne processed $27.90 $24.37 $24.94 $25.68 Cash Cost per Cu Eq pound sold $1.34 $1.12 $1.49 $1.29 All-in Sustaining Cost per Cu Eq pound sold 4 $2.34 $2.22 $2.68 $1.94 All figures as reported in Sierra s MD&A for the relevant period. 1. Metric tonnes 2. Silver equivalent ounces and copper equivalent pounds were calculated using quarterly realized metal prices. Silver and copper equivalent figures will change based on metal prices used each quarter in the equivalent metal calculations. See Appendix for quarterly realized metal prices for the last 13 quarters. 3. Cash Flow from Operations before movements in working capital is a non-ifrs number and excludes the movement from period to period in working capital items including trade and other receivables, cash taxes paid, prepaid expenses, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. Please see Appendix for reconciliation to comparable IFRS measure. 4. All-in Sustaining Costs is a non-ifrs number and includes Treatment and Refining Charges, Selling Costs, G&A Costs and Sustaining Capex. Please see Appendix for reconciliation to comparable IFRS measure. Cu Eq M lbs Copper Equivalent Production (M lbs) M

25 MEXICO-BOLIVAR MINE Bolivar Northwest and Bolivar West Targets 1 Bolivar NW Bolivar 2 Bolivar West El Gallo Titan 24 Geophysical Survey completed on Bolivar West and Northwest areas resulting in 24 anomalies and 8 high value drill targets. 17,000 Meters of drilling program completed in 2017 with the majority occurring at Bolivar West where high grade copper intercepts have occurred. 28 holes (12,300 meters), recently completed which provided the Company with higher Copper, Zinc and Silver grades. Mineral Reserve and Resource Updated press released on May 22, 2018 with and NI report to follow with 45 days. Mineral Reserves increased by 83% Bolivar West average grade of 2.55% copper equivalent with an average true width of 9.1 meters, which is significantly above El Gallo s current resource grade and current head grades. TSX SMT BVL SMT Bolivar West still has further potential resource growth prospects and remains open to the northeast. 25

26 MEXICO-BOLIVAR MINE Bolivar Mineralized Zone Layout Recently Discovered Currently being mined 26

27 CUSI MINE Reinterpretation of Geology New High-Grade Silver Discovery

28 MEXICO-CUSI MINE Cusi Silver Mine Ownership 100% Size Commodities Operation Mill throughput 11,671 Hectares Silver, zinc, lead, gold Underground mine in development; cut and fill 650 TPD increasing to 1,200 TPD in Q to 2,700 TPD in Mid-2021 Annual Production 549 K Oz Silver Equivalent Concentrates Deposit Type Lead and Zinc concentrates with significant silver High-grade, low sulphidation epithermal deposit Tonnes M Ag (g/t) Pb (%) Zn (%) Au (g/t) Ag Eq (g/t) Ag Eq (M oz) Measured Indicated Inferred Details of the resource estimates for Cusi are presented in the Appendix. Revenue Mix Trailing 12 months ending March 31, % 3% LEAD GOLD 6% ZINC 84% SILVER 28

29 MEXICO-CUSI MINE Cusi PEA for 315% Output Expansion Plant Processing Rate 2,700 TPD NPV: $92 Million (After tax with 8% discount) IRR: 75% (After tax) 650 TPD 1,200 TPD Current Q Mid-2021 Other Highlights of the PEA include: After-tax Payback Period: 4.6 years Life of Mine Capital Cost: US$104.5 Million Net After-tax Cash Flow: US$150.6 Million Total Operating Unit Cost: US$41.36/tonne Average Silver Recovery Rate 87% Mine Life: 9 years based on existing Mineral Resource Estimate Life of Mine Silver Production: 30 Million Ounces 29

30 MEXICO-CUSI MINE Increasing Grade & Tonnage via Brownfield Exploration The Cusi Fault is a 64 kilometer regional structure 12 kilometers of the Cusi Fault containing the Santa Rosa de Lime ( SRL ) Zone lie within Sierra Metals property boundaries Santa Rosa de Lima Zone Open 1.7 km Open 30

31 MEXICO-CUSI MINE Santa Rosa de Lima Zone Average grade of the intercepts for 29,500 meter program is 372 g/t AgEq with Average true width of 3.8 meters. Step out drilling extends silver mineralization beyond the Santa Rosa de Lima zone with similar high-grade characteristics. Zone extended from 1 km to 1.7 km all within the 12 km structure running inside Sierra Metals property boundary. New Mineral Resource published December Meters Potential Feeders 31

32 MEXICO-CUSI MINE SRL Conceptual Mine Design Mine Design Long Hole Mine Plan Drift development completed on four primary sub levels, additional three levels to be completed in 2018 Ramp development continues to the lower part of SRL complex 32

33 INVESTMENT HIGHLIGHTS Why Invest in Sierra Metals? Diversified Asset Base Diversified asset base with a multi-asset production Platform Strong Growth Story Robust Operational Track Record Well Established Mining Jurisdictions Strong growth storey that builds on a very successful lower risk, near-mine brownfield exploration effort since 2016 that is yielding remarkable reserve and resource increases Robust Operational Track Record at all three Mines with robust performance Operations based in first class, well established mining jurisdictions Solid Financial Position Solid financial position underpinned by strong capitalization, low net leverage and robust liquidity position Experienced Management Team Experienced management team with strong operational and development track record, with strong support and sponsorship from ARCM Fund 33

34 CONTACT Information Investor Relations Sierra Metals Inc. Mike McAllister VP, Corporate Development Christiana Papadopoulos Manager, Investor Relations Corporate Office TD South Tower 79 Wellington Street West, Suite 2100 Toronto, ON M5K 1H1 T: T: E: Follow us:

35 APPENDIX APPENDIX

36 HISTORICAL Financial Performance Revenue ($M) CF before Movements in WC ($M) 1 CAPEX ($M) M M M-2018 Cash and Cash Equivalents ($M) Debt ($M) M M-2018 All figures as reported in Sierra s MD&A for the relevant period. 1. Cash Flow from Operations before movements in working capital is a non-ifrs number and excludes the movement from period to period in working capital items including trade and other receivables, prepaid expenses, cash taxes paid, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items. Please see Appendix for reconciliation to comparable IFRS measure. 36

37 CONSOLIDATED DEBT Breakdown Estimated as of March 31, 2018 BCP Acquisition Credit Facility Credit Facility with BCP Corona Loan with BCP Credit Facility with BBVA Banco Continental FIFOMI Mexican Government Debt Facility Who s Debt: Dia Bras Peru Dia Bras Peru Corona Corona Dia Bras Mexico Amount (USD): $39.1M $15.0M $4.7M $5.0M $3.0M Term (years): Maturity Date: Aug 31, 2020 Aug 31, 2018 Oct 17, 2018 Sept 21, 2018 Dec 23, 2019 Interest Rate: 3M LIBOR % 3M LIBOR + 1.0% 3M LIBOR + 4.5% 3M LIBOR % TIIE % Payment Schedule 2 : Quarterly Quarterly Quarterly On Maturity Monthly Use of Proceeds: Corona s Acquisition Working Capital CAPEX Working Capital Working Capital 1. TIIE: Tasa de Interes Interbancaria del Banco de Mexico. 2. In accordance with our amended acquisition credit facility with Banco de Credito del Peru ( BCP ), at least 50% of the proceeds which we receive from any equity capital transaction must be allocated to the mandatory prepayment of the amounts owing to BCP under such facility. BCP Acquisition Credit Facility has a $24 million bullet payment due in August of

38 2018 CAPEX GUIDANCE (US$ M) Breakdown US$ Million Yauricocha Bolivar Cusi Total Sustaining Capex Exploration Capex Growth Capex TOTAL Exploration Drilling (meters) 33,500 10,000 27,750 71,250 38

39 PRODUCTION Guidance and Production by Metal 3M-2018 Production 2018 Guidance Mine Yauricocha Bolivar Cusi Total Low High Silver (M oz) Silver (M oz) Copper (M lb) Copper (M lb) Lead (M lb) Lead (M lb) Zinc (M lb) Zinc (M lb) Gold (K oz) Gold (K oz) Yauricocha Production M-2018 Tonnes processed 1 832, ,169 1,023, ,389 Tonnes per day 2,378 2,563 2,924 3,102 Silver ounces (M oz) Copper (K lbs) 5,567 6,281 11,719 3,727 Lead (K lbs) 39,430 36,440 27,934 6,069 Zinc (K lbs) 42,077 54,805 75,151 18,144 Gold ounces 5,018 4,664 2, Zinc Eq (M lbs) Bolivar Production M-2018 Tonnes processed 1 830, , , ,375 Tonnes per day 2,373 2,715 2,535 2,964 Silver ounces (M oz) Copper (K lbs) 17,629 17,109 15,056 4,363 Gold ounces 3,216 2,986 2,880 1,048 Copper Eq (M lbs) All figures as reported in Sierra s MD&A for the relevant period. 1. Metric tonnes 2. Silver equivalent ounces and copper equivalent pounds were calculated using quarterly realized metal prices. Silver and copper equivalent guidance figures will change based on metal prices used each quarter in the equivalent metal calculations. 39

40 CONSOLIDATED Reserve and Resource Table * Reserves - Proven and Probable Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq ZnEq Ag Cu Pb Zn Au AgEq CuEq ZnEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (%) (M oz) (M lb) (M lb) (M lb) (K oz) (M oz) (M lb) (M lb) Yauricocha Proven 1, Probable 7, Proven & Probable 8, ,127 Bolivar Proven Probable 7, Proven & Probable 7, Total Proven & Probable 16, Resources - Measured and Indicated Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq ZnEq Ag Cu Pb Zn Au AgEq CuEq ZnEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (%) (M oz) (M lb) (M lb) (M lb) (K oz) (M oz) (M lb) (M lb) Yauricocha Measured 3, Indicated 10, ,478 Measured & Indicated 13, ,028 Bolivar Measured Indicated 13, Measured & Indicated 13, Cusi Measured Indicated 4, Measured & Indicated 4, Total Measured & Indicated 31, Resources - Inferred Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq ZnEq Ag Cu Pb Zn Au AgEq CuEq ZnEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (%) (M oz) (M lb) (M lb) (M lb) (K oz) (M oz) (M lb) (M lb) Yauricocha 6, Bolivar 8, Cusi 1, Total Inferred 16, * See cautionary note to US investors on Disclaimers page 40

41 NOTES Reserve and Resource Estimate Yauricocha Mine: 1. The effective date of the Yauricocha mineral reserve and resource estimate is July 31, Details of the estimate are provided in a NI technical report filed on SEDAR on November 10, Zinc equivalency is based on the following metal price assumptions: US$17.80/oz Ag, US$2.60/lb Cu, US$1.01/lb Pb, US$1.25/lb Zn and US$1,255/oz Au. Metallurgical recovery assumptions are variable between mineralization types, and are based on actual plant data for They range (where recovered) from 28-67% Ag, 39-65% Cu, 66-85% Pb, 89% Zn, 16-54% Au. The equivalency expression is designed to present an in-situ zinc equivalent, considering the recovered value of the other metals expressed in the value of zinc percent. The equation is: ZnEq = ((Ag*Ag$*Agrec)+(Cu*Cu$*Curec)+(Pb*Pb$*Pbrec)+(Zn*Zn$*Znrec)+(Au*Au$*Aurec)) / (Zn$*Znrec). Bolivar Mine: 2. The effective date of the Bolivar mineral reserve and resource estimate is October 31, Details of the estimate are provided in the Company s May 22, 2018 press releases and a NI technical report will be filed on SEDAR within 45 days of the May 22, 2018 press release. Measured, Indicated and Inferred Resources include Proven and Probable Reserves. Copper equivalent is based on the following metal prices: US$18.25/oz Ag, US3.00/lb Cu and US$1,291 Au. Totals for Proven and Probable are diluted for internal waste. Metallurgical recovery assumptions are based on actual plant data for 2017 and are 78% Ag, 83% Cu, and 64% Au. The equivalency expression is designed to present an in-situ copper equivalent, considering the recovered value of the other metals expressed in the value of copper percent. The equation is: CuEq = ((Ag*Ag$*Agrec)+(Cu*Cu$*Curec)+(Au*Au$*Aurec)) / (Cu$*Curec). Mina Cusi: 3. The effective date of the Cusi mineral resource estimate is Aug 31, Details of the estimate are provided in a NI technical report filed on SEDAR on February 12, Mineral resources that are not mineral reserves do not have demonstrated economic viability. Silver equivalency is based on the following metal price assumptions: US$18.30/oz Ag, US$0.93/lb Pb, US$1.15/lb Zn and US$1,283/oz Au. Based on the historical production information for Cusi, the metallurgical recovery assumptions are 84% Ag, 86% Pb, 51% Zn, 57% Au. The equivalency expression is designed to present an in-situ silver equivalent, considering the recovered value of the other metals expressed in the value of silver g/t. The equation is: AgEq = ((Ag*Ag$*Agrec)+(Pb*Pb$*Pbrec)+(Zn*Zn$*Znrec)+(Au*Au$*Aurec)) / (Ag$*Agrec). 41

42 HISTORICAL Realized Metal Prices Realized Metal Prices (In US dollars) Q Q Q Q Q Q Q Q Q Q Q Q Q Silver (oz) $ $ $ $ $ $ $ $ $ $ $ $ $ Copper (lb) $ 2.63 $ 2.75 $ 2.38 $ 2.19 $ 2.13 $ 2.15 $ 2.16 $ 2.38 $ 2.64 $ 2.58 $ 2.93 $ 3.13 $ 3.14 Lead (lb) $ 0.81 $ 0.89 $ 0.77 $ 0.77 $ 0.80 $ 0.79 $ 0.85 $ 0.95 $ 1.04 $ 0.99 $ 1.08 $ 1.11 $ 1.15 Zinc (lb) $ 0.95 $ 0.99 $ 0.82 $ 0.73 $ 0.77 $ 0.86 $ 1.02 $ 1.16 $ 1.27 $ 1.20 $ 1.36 $ 1.45 $ 1.56 Gold (oz) $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, Realized Metal Prices (In US dollars) 3M M M 2015 FY M M M 2016 FY M M M 2017 FY M 2018 Silver (oz) $ $ $ $ $ $ $ $ $ $ $ $ $ Copper (lb) $ 2.63 $ 2.69 $ 2.59 $ 2.51 $ 2.13 $ 2.14 $ 2.15 $ 2.23 $ 2.64 $ 2.63 $ 2.70 $ 2.82 $ 3.14 Lead (lb) $ 0.81 $ 0.85 $ 0.82 $ 0.82 $ 0.80 $ 0.79 $ 0.82 $ 0.84 $ 1.04 $ 1.01 $ 1.03 $ 1.06 $ 1.15 Zinc (lb) $ 0.95 $ 0.97 $ 0.92 $ 0.89 $ 0.77 $ 0.83 $ 0.90 $ 0.98 $ 1.27 $ 1.24 $ 1.28 $ 1.32 $ 1.56 Gold (oz) $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1, $ 1,

43 Non-IFRS DISCLOSURE All-in Sustaining Costs From time to time Sierra Metals Inc may publicly disclose certain Non-IFRS financial measures in the course of its financial presentations, earnings releases, earnings conference calls and otherwise. The Company uses certain Non-IFRS performance measures and ratios in managing its business. The Company believes that these measures assist investors in evaluation the Company s performance by providing users of the Company s financial information with additional meaningful comparisons between current results and results from prior operating periods. Non-IFRS financial measures should be viewed in addition to and not as an alternative to the reported operating results or any other measure of financial performance in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures that other companies use. The following tables provide detailed information on cost of sales, cash cost, and all-in sustaining cost per silver equivalent payable ounce and copper equivalent payable pound taken from the Management Discussion and Analysis reports for 2015 (using budgeted metals prices) and for 2016, 2017 and 2018 (using realized metals prices): Consolidated: Yauricocha: CONSOLIDATED Year End Year End Year End Three Months Ended (In thousand of US dollars, unless stated) Total Cash Cost of Sales 78,840 79,894 96,532 26,832 All-In Sustaining Cash Costs 153, , ,835 39,037 Silver Equivalent Payable Ounces (000's) 10,166 10,012 13,034 3,964 Cost of Sales 79,988 81, ,979 28,348 Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$) Copper Equivalent Payable Pounds 67,593 77,376 79,222 21,144 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$) Zinc Equivalent Payable Pounds 191, , ,248 42,521 Cost of Sales per Zinc Equivalent Payable Pound (US$) Cash Cost per Zinc Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Zinc Equivalent Payable Pound (US$) YAURICOCHA Year End Year End Year End Three Months Ended (In thousand of US dollars, unless stated) Cash Cost per silver equivalent payable ounce Total Cash Cost 43,813 50,045 63,890 17,109 Variation in Finished inventory 714 1,472 (1,222) 777 Total Cash Cost of Sales 44,527 51,517 62,668 17,886 Treatment and Refining Charges 24,085 19,502 12,447 2,826 Selling Costs 3,382 3,613 4,156 1,032 G&A Costs 4,583 4,928 6,054 1,851 Sustaining Capital Expenditures 6,579 7,357 11,632 1,884 All-In Sustaining Cash Costs 83,156 86,917 96,957 25,479 Cost of Sales 45,940 53,705 67,542 19,821 Zinc Equivalent Payable Pounds 118, , ,077 31,256 Cost of Sales per Zinc Equivalent Payable Pound (US$) Cash Cost per Zinc Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Zinc Equivalent Payable Pound (US$)

44 Non-IFRS DISCLOSURE All-in Sustaining Costs (continued) Bolivar: BOLIVAR Year End Year End Year End Three Months Ended (In thousand of US dollars, unless stated) Cash Cost per copper equivalent payable pound Total Cash Cost 23,171 23,162 22,127 6,660 Variation in Finished inventory 2,740 (3,462) 4,342 (483) Total Cash Cost of Sales 25,911 19,700 26,468 6,177 Treatment and Refining Charges 6,427 5,697 4, Selling Costs 3,085 2,610 2, G&A Costs 3,656 3,219 2, Sustaining Capital Expenditures 5,708 7,827 11, All-In Sustaining Cash Costs 44,787 39,053 47,572 9,281 Cost of Sales 27,238 23,064 27,418 6,992 Copper Equivalent Payable Pounds 19,535 17,646 17,747 4,790 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$) Cusi: CUSI Year Ended Year Ended Year Ended Three Months Ended (In thousand of US dollars, unless stated) Cash Cost per silver equivalent payable ounce Total Cash Cost 7,868 9,121 7,659 2,252 Variation in Finished inventory 534 (444) (264) 517 Total Cash Cost of Sales 8,402 8,677 7,396 2,769 Treatment and Refining Charges 2,354 2,868 2, Selling Costs G&A Costs Sustaining Capital Expenditures 12,889 4,401 5, All-In Sustaining Cash Costs 25,226 17,226 16,306 4,277 Silver Equivalent Payable Ounces (000's) Cost of Sales 6,810 5,063 6,019 1,535 Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$)

45 Non-IFRS DISCLOSURE Cash Flows From time to time Sierra Metals Inc may publicly disclose certain Non-IFRS financial measures in the course of its financial presentations, earnings releases, earnings conference calls and otherwise. The Company uses certain Non-IFRS performance measures and ratios in managing its business. The Company believes that these measures assist investors in evaluation the Company s performance by providing users of the Company s financial information with additional meaningful comparisons between current results and results from prior operating periods. Non-IFRS financial measures should be viewed in addition to and not as an alternative to the reported operating results or any other measure of financial performance in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures that other companies use. Consolidated Statement of Cash Flows: Year End Year End Year End Three Months Ended (In thousand of US dollars, unless stated) Cash flows from operating activities Net income from operations (35,313) (12,721) (860) 11,133 Adjustments for: Decomissioning liabilities settled Items not affecting cash: Depletion, depreciation and amortization 46,840 45,711 58,236 7,569 Share-based compensation 1, , Impairment charge 19, Loss on sale of supplies Interest expense and other finance costs 4,776 3,676 3, Loss on spin out of Plexmar net assets - - 4,412 - NRV adjustment to inventory - - 2, Current income tax expense 6,841 9,629 23,416 7,519 Deferred income tax recovery (9,664) (3,872) (13,068) (340) Unrealized foreign currency exchange gain (loss) (1,333) 1, (633) Operating cash flows before movements in working capital 32,475 44,303 79,785 27,348 Capital expenditures (37,601) (25,352) (51,607) (9,737) Free Cash Flow (5,126) 18,951 28,178 17,611 45

46 PROVEN & EXPERIENCED Management Team Igor Gonzales, President & Chief Executive Officer Mr. Gonzales has more than 35 years of experience in the mining industry, most recently he was COO at Buenaventura and prior to that was with Barrick Gold from 1998 to 2013 where he most recently held the position of Executive VP and COO. Prior to joining Barrick, he served in various roles with Southern Peru Copper. Gordon Babcock, P.Eng., Chief Operating Officer Over 34 years of experience in mine production management, project development, engineering, exploration and mine consulting in precious, base metals and aggregate operations in the Americas. Most recently COO at Jaguar Mining and has previously worked for Nyrstar, Breakwater Resources, Coeur Mining Inc., Milpo, The Hochschild group in Peru, Muscocho Explorations, and The Noranda Group. Ed Guimaraes, Chief Financial Officer 25 years experience in the mining industry, most recently in a consulting role and several Board directorships. Previously, Mr. Guimaraes was with Aur Resources between 1995 and 2007, ultimately serving as Executive Vice-President, Finance and Chief Financial Officer, until its acquisition by Teck Resources. Prior to 1995, he worked in the Toronto mining group of PricewaterhouseCoopers. Alonso Lujan, Vice President Exploration 26 years international experience in mineral exploration with a positive track record for increasing companies' resources, output and company value. Mr. Lujan most recently spent 6 years with Mata-Trafigura as the General Manger. Prior to that he worked with Hochschild Mining and Minas de Bacis SA de CV. Americo Zuzunaga, CP (Geologist by Mining Engineer), Vice President Corporate Planning Over 30 years of international experience in mining operations, mine and business planning, engineering studies (PEA, PFS, FS), Project Management and optimizing development. Mr. Zuzunaga was most recently at BISA as a Technical Studies Manager and previously worked at BHP Billiton in successive planning roles. Previously he has been employed with Antamina, Yanacocha and Southern Peru Copper. Augusto Chung, CP (Metallurgist), Consultant to Sierra Metals 34 years metallurgical and mine management experience with a positive track record for increasing companies' output and company value. Mr. Chung was most recently with Rio Alto Mining as the Vice President of Projects. Prior to that he worked with Milpo, Barrick and Antamina and Southern Peru Copper. Dante Vargas, Vice President, Human Resources and Continuous Improvement Over 35 years of experience in management, strategic planning, organizational effectiveness and security and risk management in different countries in Latin America. Most recently he was the Operational Excellence Manager for Buenaventura. Previously he was with Barrick South America and Barrick Peru, where he managed the implementation of HR processes and systems and managed large projects including participation in the construction of the Pascua Lama project. Mike McAllister, Vice President, Corporate Development 13 years of experience working with public mining companies, the last 8 as a mining specialized investor relations professional. Mr. McAllister previously worked for Avion Gold which was Acquired by Endeavour Mining, Savary Gold, Alder Resources and Black Iron in their Investor Relations and Corporate Development programs. Previously Mr. McAllister worked at BMO Capital Markets in the Metals & Mining Group.

47 EXPERIENCED & ACCOMPLISHED Board of Directors Alberto Arias, Chairman & Director Mr. Arias has over 21 years of experience in the field of international mining finance. He is the founder and President of Arias Resource Capital Management LP ( ARCM ). Prior to ARCM, he was Managing Director & Head of Equity Research for Metals and Mining at Goldman Sachs and a former mining analyst at UBS. Igor Gonzales, President & Chief Executive Officer Mr. Gonzales has more than 35 years of experience in the mining industry, most recently he was COO at Buenaventura and prior to that was with Barrick Gold from 1998 to 2013 where he most recently held the position of Executive VP and COO. Prior to joining Barrick, he served in various roles with Southern Peru Copper. Doug Cater, Director Mr. Cater, a seasoned geologist with over 30 years of experience in the gold mining and exploration business and is currently Vice President, Exploration at Kirkland Lake Gold. He also serves as a Council member of the Association of Professional Geoscientists of Ontario (APGO), representing the Southwest Ontario district. Steven Dean, Director Mr. Dean has extensive international experience in the mining industry and is currently the Chairman & CEO of Atlantic Gold. Previously Mr. Dean was the President of Teck Cominco (now Teck Resources). Prior to joining Teck, he was a founding director of Normandy Poseidon Group (which became Normandy Mining) as well as founder of PacMin Mining. Philip Renaud, Director Mr. Renaud is Managing Director of LB Advisors, a European investment advisory firm involved in private financings. Prior to joining LB he was a founding partner of Change Capital Partners, a 300 million Euro private equity fund. Dionisio Romero Paoletti, Director Mr. Romero is Chairman of the Board of Directors of Credicorp and Banco de Credito BCP, Peru's largest bank, and has been the Chief Executive Officer of Credicorp (NYSE: BAP) since Mr. Romero is a graduate of Brown University with a degree in Economics and earned an MBA from Stanford University. Jose Alberto Vizquerra-Benavides, Director Mr. Vizquerra is currently Executive Vice President of Strategic Development & Director at Osisko Mining. For over four years, he served as the President & CEO of Oban Mining Corp. ( Oban ), where he led the successful change of business strategy that resulted in Oban s acquisition of Corona Gold, Eagle Hill Exploration Corp. and Ryan Gold to form what is now Osisko Mining. Mr. Vizquerra previously worked as Head of Business Development for Compania de Minas Buenaventura, prior to which he worked as production and exploration geologist at the Red Lake gold mine. He is currently a board member of Alio Gold Inc, Sierra Metals and Discovery Metals. Mr. Vizquerra holds a M.Sc. from Queens University in MINEX, and is a Qualified Person (AIGP). Mr Vizquerra is currently advancing the General Management Program (GMP) at the Wharton School of Business.

48 BOARD OF DIRECTORS Adviser and Observers Alberto Beeck, Adviser to the Board Alberto Beeck is an investor and entrepreneur who combines his time between businesses and social impact activities in the education sector. He is Managing Partner of Cranley Investments Holdings, Managing Partner of VH Properties, Chairman of Lumni and of Sin Limites. Mr Beeck serves on several boards and is a member of the board of trustees of Georgetown University. Alejandro Perellón, Observer to the Board Alejandro Perellón is a Vice President with Arias Resource Capital Management LP. Previously, Mr. Perellón worked within the Latin America Investment Banking team at UBS in New York, where he focused on the metals and mining industry.